Why is Dogecoin’s Price Falling Today?
In order to understand the recent decrease in Dogecoin’s value, which fell over 3.5% to $0.076 on November 28th, we need to take a closer look at some of the likely contributing factors within the cryptocurrency market. This drop underperformed the overall crypto market fall of around 1.25% during the same time frame.
1) Bearish Divergence
The decrease in Dogecoin’s price today precedes a period distinguished by growing bearish divergence between its price and a vital momentum index. Between October 6 and November 17, Dogecoin’s price experienced a rally, forming higher peaks. However, concurrently, its daily relative strength index (RSI) lowered, resulting in lower peaks. The divergence between elevating prices and a falling RSI traditionally suggests a weakness in the uptrend, leading traders to secure profits at local price peaks.
2) Rising Bitcoin Dominance
Bitcoin’s growing market influence has also played a role in Dogecoin’s recent decrease. The Bitcoin Dominance Index, which assesses Bitcoin’s market percentage compared to the cumulative weight of all altcoins, has increased 0.83% in the previous 24 hours. This shift suggests that investors are transitioning their capital from altcoins like Dogecoin to Bitcoin.
3) Psychological Resistance
Another plausible cause for Dogecoin’s diminishing price is its bearish rejection by several robust distribution areas. Specifically, Dogecoin’s price experienced a downturn after attempting to retest its 0.236 Fib line near $0.081.
4) DOGE Whales’ Influence
The reduction in Dogecoin’s price also coincides with a decrease in the Dogecoin supply held by its wealthiest investors. The wealthiest cohort’s Dogecoin supply has dwindled nearly 1% in the past two weeks. Paradoxically, the supply retained by the following group (those holding over 1 billion DOGE) has increased by 0.5% over the same period.
What’s Next for the Dogecoin Bull Market?
From a technical standpoint, for Dogecoin’s price to experience an upturn, it needs to break above the upper trendline of its prevailing descending triangle setup. If this scenario plays out, the price may reach $0.10, its September 2022 resistance point, by the end of 2023.
However, bears will likely strive to pull down DOGE/USD by 25% to $0.056 by the end of the year, and possibly even by 70% to $0.023 in Q1-2024 if the price breaks below the triangle’s lower trendline.
As we know, a descending triangle that forms within a downtrend is typically regarded as a bearish continuation setup. The pattern becomes fully actualized when the price falls below its lower trendline and decreases by the greatest distance between its upper and lower trendline.
Please remember that investing and trading moves involve risk. Therefore, it’s essential to conduct your own research when making a decision.